279. Bitcoin and Tether: Las Vegas Keynote

0:03 [Music] Thank you. Thank you everybody for coming out and thank you to the organizers for having me. It's a pleasure and an honor to be here today. I'm going to be talking about Bitcoin and the dollar in particular about Tether and a lot of people think that Tether is going to be something that is very bullish to the dollar and and you know to be fair they found a whole new generation of bag holders around the world to buy the uh Treasury Shitcoin. So you would think that that would generally be bullish, but I'd like to take a closer look at it and see how bullish it actually is. So let us run some numbers. Let's assume for as a thought experiment, let's assume that Tether grows 100fold over the next 10 years. That's a compound annual growth rate of 60% per year. So it gets to

0:49 about a 20 trillion market cap by 2035. And now assume that they continue to put about 80% of their uh treasury and their backing of their uh notes into uh all maturities of US bonds. Currently they're only buying short maturities but assume they start buying across the curve across the yield curve. And uh to try and estimate the impact that this would have on the budget I've looked at the literature on the impact of purchases of bonds on the yields. So there's a lot of studies that have been done on what was the impact of QE you know when say if you buy 10% of the debt and you put it into uh what the impact would be on yields. So I think generally the literature says every 10% of the

1:35 debt if you buy 10% of the debt you can bring yields down by uh 2 to 5%. But I'm going to assume 1%. I'm going to just have a maximum um most optimistic scenario in all of our assumptions here to try and see how this was would work out. So you buy 10% of the debt and you bring the yield down by 1%. So if we assume this is the case and then we project the impact on the US budget. Well, currently the debt is about $37 trillion. The budget deficit is about $2 trillion. And so if we assume that the budget deficit, the debt and the liabilities continue to rise at the same rate over the next 10 years as they did over the last 10 years, we could project it into the next 10 years. And you know,

2:23 this is a extremely conservative um assumption because it's assuming that the next 10 years are going to be as inflationary as the previous 10. And I don't think that that is a warranted assumption, but we're going to go ahead with it anyway. Um, I think there's been a new normal since CO and I think this new administration confirms that the budget is going to just continue on the new normal level of spending that happened after CO and it's going to be different from what was taking place before CO which was relatively very uh fiscally and monetarily responsible compared to what's been happening since then. So, you know, looking now we see that Doge is seemingly not going to work. They're not going to be managing to bring down the budget by anything more than, you know, rounding errors. There's a bunch of wars coming up

3:08 likely. Israel wants more land and, you know, they like more war. It's been a while since the US has fought a major war for um so likely there's going to be another one. So if you project those things, likely the budget is going to get a lot worse over the next 10 years, plus also the tariffs um and the impact that they'll have. So if we run these projections we'll see that basically by buying a lot of treasuries growing at 60% per year as we see in this table here we grow the treasuries of tether by 60% per year and we see that this is going to bring yields down right that's the way in which buying treasuries helps the US government in a practical sense the more treasuries tether buys the lower the yields become so we try and

3:54 calculate this and try and projected uh onto 10 years from now and basically the most optimistic scenario according to these assumptions that I've just presented which are all basically airing on the side of becoming more and more optimistic it reduces the debt by about $3.7 trillion or 5.4% 4% of the debt over 10 years. This is I think maybe the most optimistic scenario you could probably present for the impact that tether could have on the US public debt. And in conclusion, basically nothing stops this train as Lyn Alden always says and not even Tether uh Tether cannot fix what a century of fiat democracy ruined. There's been a century of inflation, a century of debt, a century of liabilities piled up, and you're not

4:41 just going to find an enormous number of bag holders that are going to be able to buy this. Um, ultimately, I think another point that is often ignored here is that a lot of the new demand, a lot of the demand that is coming for Tether is displaced demand. A lot of it is coming from people who are giving up on financial instruments that would have demanded treasuries otherwise. In other words, when u when a currency collapses and people in that country start using tether, they're decreasing the demand for treasuries by the central bank of the government whose currency has collapsed. So, it's not entirely new demand. And even if it were entirely new demand, even if we assume that 80% of it, as we did in the previous example,

5:27 we still see that the impact on the uh debt situation in the US is not likely to be significant. It's not likely to make a significant difference because the amount of budget deficit is enormous and it's continuing to grow and the debt and the interest are continuing to grow and it won't touch the entitlements. it won't touch the defense spending and so therefore all of this new extra demand is not really going to make a big difference. It's ultimately no way to escape the inevitable fate of default devaluation or default by devaluation which are essentially all more or less the same thing that a lot of people who are owed a lot of liabilities are going to find out that they're not going to get what they want from them. So this is

6:13 ultimately what I think is u more likely. Yes, it can help the uh fiscal position of the US government that more and more people are buying tether but I don't think it will make that big of a difference. But where does that leave tether? I think there's an interesting question here to ask which is what is the impact that is going to have on tether given that their reserves are being devalued or that they might default on. So devaluation is not a big problem for Tether because their liabilities devalue as well. When the dollar goes down, the value of their liabilities and their asset goes down. So that's not a big problem. The bigger risk for them, of course, is default. Default is the main risk. And in particular, you know, uh could be that the US government defaults specifically on Tether's bonds. Um, specifically

6:58 after they buy a lot of bonds, the US government could just say, "Oh, well, somebody was involved in some criminal transaction with Tether. Therefore, all of your bonds are cancelled." They've done it with Russia. Maybe they'll do it with Tether again at some point. Now, Tether are smartly hedging against this and protecting themselves from this by doing the smart thing that everybody should be doing, which is buying Bitcoin. It's the smartest thing that anybody could do. So, currently, Tether has over 100,000 bitcoins, which is worth more than $10 billion. and their US dollar denominated reserves and treasuries are around 120 billion. So currently they've got more than 10 times as much fiat as they do Bitcoin. However, if there's one thing we know about Bitcoin, it's that it has number go up technology. And if there's one thing we know about the dollar, it's

7:44 that it has number go down technology. Now, one thing keeps going up, the other thing keeps going down. Inevitably, the thing that goes up is going to overtake the things that go down. And so whether through default, devaluation, or both, Tether's Bitcoin reserves will likely eventually overtake its US dollar reserves, the ways in which we get there might be different. But as long as Tether keeps buying more and more Bitcoin, which they seem not to be stopping, and which seems to be a very wise thing for them to do because it's the only way to protect themselves from devaluation of the dollar and default on treasuries. As long as they keep doing that, the value of their Bitcoin reserves is going to continue to go up and likely it's going to overtake their US dollar reserves. Now, at this point,

8:32 something that the Tether uh fudsters have said would happen might actually finally happen. You know, we've always heard the Tether is going to break the um peg and maybe it will happen in this situation because ultimately the real risk for Tether. The riskiest part of their business is the Treasury bonds. Treasury bonds, which are usually presented as the safe haven, are actually the main risk for Tether. And so over time, as their bonds devalue, as their dollars devalue, their bitcoins appreciate. And so therefore, they will be able to break the uh the backing of Tether with the dollar, but they would break the peg upwards. In other words, it would be possible for them at some point to revalue Tether upwards. And so they make it so that one tether is

9:17 redeemable for $12. And then they could keep doing that further and further. They keep revaluing it upwards as the dollar drops. So tether becomes relatively stable coin while the dollar keeps devaluing. If they offered the world a dollar plus 2% per year or 1% per year that would that would be more attractive than the dollar for a lot of people. And so therefore we enter into this cycle where tether can increase its valuation which is going to increase demand for tether at the expense of the dollar which is going to then increase the amount of tether purchases of bitcoin which is going to drive up the bitcoin price further. And the key thing here is that even though Tether puts only a small percentage of its reserves in Bitcoin, because Bitcoin is so much smaller than the US debt

10:03 market, that impact on the Bitcoin market is a lot more significant than the impact that they have with the majority of the reserves going into the debt uh the US government debt. So the US government has got some $37 trillion in debt, which is enormous. Bitcoin is only 2 trillion. So a tiny amount of money going into Bitcoin causes it to go up a lot more than the same amount of money going into the bond market. So Bitcoin price appreciates the more that Tether buys. That causes the Tether reserves to appreciate and that then helps them revalue their currency further and further and further. And eventually what we see is because of the way the fact that because of the fact that Tether is accumulating Bitcoin reserves, it can effectively grow its

10:49 way out of being a bitcoin of being a dollar stable coin into becoming a stable coin that backs that is backed by Bitcoin. it can eventually redominate redenominate itself on in bitcoin terms eventually making it so that it just becomes another mechanism for the scaling of bitcoin. I think the key point to keep in mind is that the ability of Tether to prop up the debt market is extremely small because the debt market is so enormous and the world is already saturated with dollars and there's just not that much possibility for new dollar demand because the vast majority of financial uh sector u assets are essentially dollarbacked assets. On

11:36 the other hand, the Bitcoin market is very small and so small demands into Bitcoin will go up and over time they're likely to maintain their value a lot better than their dollar reserves are going to do. So what we're having emerge right now is essentially rather than being a way to boost the dollar. I think Tetar is a good way to transition away from the dollar because by putting some of their reserves into Bitcoin, they're allowing the world to access the dollar now, but they're allowing the world access to Bitcoin as well. Now, add in the fact that by getting people to think about money in a digital way, by getting people to think about money in terms of uh private keys and uh public addresses, Tether is helping people think about

12:21 Bitcoin. So the bottom line is that even the most bullish scenario for the US dollar, even the most imaginable way in which the US dollar's uh fate can be improved is finding an enormous amount of bag holders all over the world to buy US dollar treasury shitcoins. And yet even that scenario is a lot more bullish for Bitcoin than it is for the US dollar. Ultimately, even a lot of buying of treasuries is likely going to be a lot more bullish for Bitcoin. It's going to make a lot more of a difference for Bitcoin because of the fact that Tether is accumulating Bitcoin reserves because it's smart for them to accumulate Bitcoin reserves because this the best way for them to protect against the devaluation and the

13:08 likely default that might happen. So, I don't really see this as being a um something that's going to boost the dollar. I don't think it can make enough of a difference in the dollar. And on the contrary, I think it's going to be more and more bullish for Bitcoin. The Bitcoin Standard Podcast is brought to you by the safehouse.com, my independent publisher and bookshop, selling the best Bitcoin books in high-quality cloth hard covers built to last for generations. Most books these days are pretty fiat. They're flimsy and they fall apart quickly. And I did not want that for my books. So, I set up the safe house, especially to provide you with beautiful, long-lasting classic cloth hard covers you can proudly pass down for generations. You can get copies of my three books, The Bitcoin Standard, The Fiat Standard, and Principles of Economics. And you can also get copies of Lyn Alden's Broken Money, Parker

13:55 Lewis' Gradually Then Suddenly, and Matthew Lishiaak's Fiat Food, to which I contributed a few chapters. We now offer bulk discounts, so you can buy books for yourself and for the friends and family you'd like to learn about Bitcoin. Buy any two books for $50, any five books or more for $20 per book. And for more than 50 books, it's only $15 per book. Go to the safehouse.com, the sifhouse.com, where you can get all of these books in highquality cloth hard covers delivered worldwide, and get 10% off for paying with Bitcoin. The Bitcoin Standard podcast is brought to you by the Daylight Computer. I love to work early in the morning and late at night or in the sun outdoors, but regular computer screens are terrible at these times, and they strain your eyes. For years, I've wanted a paper-like

14:40 electronic screen on a simple computer I could use to write. I tried several models, but none were very good. Now, finally, Daylight have delivered a fantastic full function tablet with a paper-like screen that's easy on your eyes and great for outdoor use. I've been using the daylight computer to write my next book and it is absolutely fantastic and it has led me to invest in this company myself. Check out my interview with Anjan Kata in episode 249. So great to see you. This is our first in-person interview. I can't believe it. Thank you for coming on the show. Thank you for having me, Natalie. Always a pleasure to be talking to you. It's been a while. You've been busy writing another book. So I want to talk to you about the gold standard. But first, how are you finding this conference this year? cuz you've been to what, four or

15:26 five of them? Uh, I think this is my third or fourth. I I've lost count. Honestly, they're all such a big whirlwind of events going on. They all blend into one big giant days of Bitcoin awesomeness. Yeah. So, tell me about this book. Um, because you have Bitcoin Standard, then Fiat Standard, you have now other authors under your umbrella. You had Principles of Economics, which was amazing, and now the gold standard. You're going deep. I mean, what have you not written about that you really wanted to dive into with this? Well, exactly. So, I, you know, I've covered the real world, so I had to invent a fake world to write about it now because there's nothing left to write about the real world, I guess. No, it's not true. Obviously, there's more to write about the real world, but I'd always wondered about what the world would have looked like without fiat money. Once you take

16:12 the fiat bill and you start thinking about fiat and how fiat affects everything, it's really one of the most disconcerting realizations of just how much uh damage it has done to our world and how different our world would be without it. And once you start thinking about that, it's just almost consuming. You you keep thinking about what this means and what the implications are. And frankly, the implications are enormous. So uh I've always had this idea in my mind of trying to think about what the world would have looked like without fiat and because you know in economics a big part of economics is to think about the counterfactual. When you're making a choice in economics in human action you don't get to do a choice in a lab setting in isolation. Everything has an opportunity cost. Time

16:58 is ticking. Life is irreversible and time just keeps moving on. And so therefore, you're always thinking about what might have been, what could have been. And you need to always think about it. And once you start conceptualizing the concept of opportunity cost and what could have been and the alternatives in your mind, that's when you start thinking properly in the economic sense. And so thinking about the question of fiat from that perspective inevitably leads you to think about what the world could have looked like. So it's a hypothetical. Yes. Book. It's a fiction book. It's a fiction book. Oh wow. I didn't realize that. I thought you were like digging deep on the gold standard with stuff covered before. No, I thought about doing that. I mean, initially that was the kind of natural consequence cuz I wrote Bitcoin fiat.

17:45 So, you would have gone back wrote and written uh about the um history of gold as money and how the gold standard function and so on. But honestly, there are a lot of books written on gold and uh I don't really particularly have much to add particularly as it's you know kind of it's kind of a dead technology at this point. It's it's been out of commission for a while and a lot of it a lot has been written already about it. But what I did have in mind was the idea for the counterfactual and I started working on the counterfactual and then it occurred to me that okay I should just name it the gold standard and then complete the trilogy. Interesting. Okay. But I mean, you say it's a dead technology, but central banks have been buying up gold. Gold is in the headlines every single day. Some people are talking about the US potentially moving back to a neutral reserve asset being

18:31 gold, not not Bitcoin yet. Um, what do you think about all of that and how how the monetary system in real time is actually changing? I doubt it. I doubt that we're going to get a move to gold. I think um governments just don't like gold. They're heavily propagandized against gold. and they heavily propagandize their populations against gold. So um I mean yeah it would be obviously an improvement over the dollar if we were to have an truly neutral international monetary system that uh could not be produced by any one particular government. But it doesn't look like it's happening. And um all these BRICS countries, they keep talking about it or they keep making noises about it or really it's mostly westerners who um you know gold

19:16 bugs who just keep projecting their dreams and wishes upon uh the bricks and just imagine either they're going to pull this off but they are not going to pull it off. The dollar is a is the biggest most liquid market. It's the easiest one to use and you don't have a liquid market infrastructure. You don't have market infrastructure to make gold liquid on an international scale. That's what's ultimately missing. So, there isn't a market for the clearance of gold. And that's a practical thing that needs to be built and it's not something that you can just mandate with a press release. You want to have a very uh um fluid, smooth, functional, cheap, reliable mechanism for moving gold from one country to the other. And these countries need to be building these systems. And they can be

20:03 built easily and they can be built cheaply, but um they're not building them. So I don't think it's happening. And I think if they start thinking about building them practically, if they start really thinking about gold in a practical sense, all that's going to happen is they're going to then truly understand the value of Bitcoin. So you don't think that they could potentially revalue the gold that the US currently has to today's market prices to maybe do an accounting trick essentially to address the deficit or no? No, no, it doesn't make difference. I mean the uh items on the asset side of the US government balance sheet are essentially um worthless. It doesn't matter how much assets they have. They just have a money printer and that's the only asset they

20:49 need. So it doesn't matter they can value the bit they can value the gold or the bitcoin at $1 each or a trillion dollar each. It's all u it it's all baloney on their balance sheet. ultimately they've got the money printer and as long as the money printer works then they don't need assets. What is the biggest headwind facing Bitcoin right now? Because we do have a lot of um positive momentum when it comes to the regulatory and the the political forces, but we're still I mean some people are disappointed that we haven't hit like 200,000 and that the early majority is really not there. So what's preventing that for Bitcoin? Yeah, it's a good question. Um, I don't really think there is uh any one particular thing that stands out as a headwind because it's hard to identify a headwind on the fastest thing that has

21:36 ever existed. Uh, we've never had any financial asset move as fast as Bitcoin has. So, uh, you know, I think the question is what are all the turbochargers that are pushing it so quickly? Uh, that's a more appropriate question. So, but on the other hand, you can kind of think, yeah, I mean, once once you get into Bitcoin and once you get it, there's that immediate feeling that, oh this is going to do a 1,000x over the next week because everybody's going to find out because if I can get it, then everybody's going to get it and everybody's going to do it. And so that doesn't happen. You know, every noob comes in, they get over excited, and then they learn to lower their time preference and start, you know, planting the garden of the Bitcoin

22:23 world that they want to see rather than just expecting it all to materialize within a few uh minutes or hours or days or weeks. So, um, if I were to think of something, I just think, um, sadly people just aren't that bright. And, uh, people are heavily propagandized to believe in government as the source of money. And they're heavily propagandized to believe that, uh, government dictates what money is. And, uh, they um, you know, people love their chains and people get grow used to their chains. And they cannot conceive of a world without their chains. and they'd rather laugh at the person who's telling them that they could get rid of their chains than to try and actually move and realize that their chains are actually

23:09 in their mind because it's really actually very straightforward to get rid of your chains. Since Bitcoin has been invented, that's it. You know, you've got the key. You can just unlock them and move on with your life. But well, it's so crazy to see the complacency um even in Wall Street. I mean this is the best performing asset of the last decade and there are still firms that are so terrified to allocate to Bitcoin or their charters prevent them from allocating to Bitcoin. Everyone is like terrified looking for permission from places like Larry Frink and Black Rockck. What What is your take on sort of the institutionalization of Bitcoin and do you think it's a good thing? Um yeah, I mean it's a um I mean there's no good and bad in in Bitcoin. It's a it's inevitable. Yeah, it's inevitable and also it's it's not up to me to

23:54 decide what other people do with their Bitcoin. So, um I can't really think of it in a sense of whether I can think of it as good or bad per se. You know, I have my own personal opinions, which is I'd rather not have uh Wall Street banks be buying Bitcoin as a matter of personal preference. I'd rather a lot of other people around the world manage to get all of these cheap sub 100k uh bitcoins, but at the you know, I can't uh I can't decide who buys bitcoin. What do you think about the corporate treasuries? I mean, because there's so many popping up and I I'm a little worried about the next bare market because I don't I don't think that all of them can survive and maybe some might take on too much leverage and that could be worrisome. Yeah. Yeah. I

24:41 mean, uh, all the leverage is just building up just in time for, uh, the top and the, uh, bust. I mean, I I just hope my message out there to everybody who's into this business is Bitcoin has done negative 70 and negative 80% before and it can do it again. If your business model can't handle a negative 80% Bitcoin draw down, rework your business model right now because you know I think we're getting toward the uh we're getting toward the very shaky ground of the top and the fall from it. Historically our top I think so I mean historically this is usually the time when we get the top between one year and 18 months after the having we're actually underperforming

25:27 the last havinging cycles like we we should be up higher in terms of the price. Well yeah if you measure from the time of the having but the difference is that usually the bull market would have started just before the having but now we had a significant bull market well before the having. So that's why it looks like we're underperforming since the having. But you know since the bottom we were up from what was it 15K to 109. That's not inconsiderable. 110 I think we hit is the highest. We're at 11 I think. 112. Yeah 112. Yeah I think 112 was the highest. So 115 to sorry 15 to 112. That's uh sevenfold. Uh so you don't think we're going to like 200k this year? No we might. But I think um I think there's a good chance we go over

26:13 200k, but I think we're getting to that point where uh it's going to be very volatile both ways. We likely, you know, we're going to get to that uh flat uh not flat, sorry, that that vertical side uh that vertical part of the curve where the where it goes up a lot. Blowoff top. Yes, the blowoff top where goes up a lot and then it uh crashes. I mean yeah we didn't get it last time because we kind of had two and then there was the China minor ban in the middle but realistically still it was uh 12 to 18 months after the having where the top happened. So the macro side I mean don't you think there's like a big print that's incoming because there's going to be enough tremors in the financial markets and the treasury market that they're going to have to come in and liqufy and that's going to be great for Bitcoin maybe. Maybe. But you know

27:01 people have been saying that for a very long time. People have been expecting that for a long time. It may happen. But uh ultimately I generally still fall back on my thesis that Bitcoin marches to its own drum beat. And yes, I think the liquidity stuff matters a lot, but it matters a lot more in the short term. And I guess it matters in kind of uh also in terms of drawing the long-term magnitudes probably it matters. But uh I think I think ultimately it's uh it's it it marches to its own drum beat. So you obviously wrote the Bitcoin Standard um Safe and you know that that book really changed my life. It has changed the lives of a lot of people. A lot of them came here to see you. Thank you. Get you to sign the book. You've sold a million copies, right? I mean that's

27:47 quite an accomplishment because you're self-published. You were basically the first big Bitcoin book out there. What does it feel like to have sold a million copies around the world? That's incredible. Yeah, it feels great. Um, definitely uh not what I had expected. I was writing a book about Bitcoin because I felt I needed to write it because otherwise I was just arguing with people on Facebook all the time and because I needed to keep my job as an academic and uh it uh it definitely blew up far further than I expected. How are we going to get the early majority really on boarded? You know, I'm going to start uh I I'm going to start working on a curriculum for children, for school children. Oh, that's great. I'm going to work on a Bitcoin guide similar to the Bitcoin standard, but simplified so that a 14,

28:34 12 year old can read it and enjoy it and learn the most important ideas from it and learn. Yeah, money and Bitcoin that's so needed. Yeah, I think it is needed. And I think, you know, the Bitcoin stand is a little too heavy for, you know, I mean, I I know some 12-year-olds and four year olds who have read it, but I think, yeah, for the average 12-year-old, it's probably a little too heavy. And also, you know, a little too elaborate. They don't need to know a lot about the details. For sure. And they just need to know the key and uh important ideas and how they apply in their life. You've been in the space for so long now. Can you just share kind of how you've seen the evolution of the Bitcoin culture, the ecosystem? I mean, now now we're embraced by the White House. We're at this conference with 30,000 people. I mean, what what's it

29:19 been like to see the growth? It's been surreal. I mean, I think I I I did not expect governments and corporations to come in so early. I would have expected if I if you were to ask me say seven, eight, nine years ago what I would expect for the year 2025, I would say I probably would have expected a lot more uh broad grassroots adoption. more and more random normal people in the US and Venezuela and Lebanon and China and Germany and all over the world buying small amounts of Bitcoin and stacking over time and uh not enough or not a lot of banks, finance, Wall Street, these things. I I I would have

30:06 expected it to be that way, but it seems to have gone the other way. Um, we're getting the concentrated adoption where, you know, large money uh is buying in quantities. People like Sailor, corporations, banks, Black Rockck. Um, it's really wild. The Bitcoin Standard podcast is brought to you by Coin Kite. Coin Kite are my favorite makers of Bitcoin hardware. They produced the legendary open dime, the first Bitcoin bearer asset, as well as the reliable cold card hardware wallet, the excellent stainless steel seed plates for storing your seed phrases, and the block clock. Now, Coin Kite have produced the SATS card, a card the size of a credit card, which can store Bitcoin and works great as a gift. Coin Kite have just produced a limited edition gorgeous Bitcoin

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31:37 If you want to give someone the gift of Bitcoin, get them this professional service that will ensure they start off knowing exactly how to manage their coins and not lose them. Go to the bitcoinway.com and start bitcoining more confidently. Do you think that wealth concentration will decrease under a Bitcoin standard? Um, I mean, obviously there's always inequality, but do you think it's going to be as concentrated in terms of wealth as it is today? Because really, we don't have a meritocracy, right? Like it's all flown to people closest to the issuers. Could that change? The thing is I I think the term inequality mathematically there are many different ways of measuring it and uh I don't think any of them is valid in a sense because um I

32:23 mean yeah you can use the genie coefficient you can say measure the ratio between the top 10% and the bottom 10%. Each one of them gives a different emphasis to the question but there's no correct way of analyzing the question or uh objective way of analyzing the question because it's just it it plays out in many different ways that can have very different implications in many different ways and so it's not uh it's not obvious which one would be the best um measure for this but in a sense I don't honestly think it matters. So the question of will Bitcoin be more unequal or not, it's difficult to answer it because it could be more unequal in the sense that there's a small little.1%

33:10 who control an enormous chunk of the Bitcoin, but outside of that.1% the rest of society might be more similar and uh or less unequal, let's say, and of of a similar income profile better than in fiat. So which one is more unequal in this regard if you just ignore the.1% if you include it. So it's difficult to estimate something like this. It's difficult to predict it. But even if we were able to predict it, it's difficult to compare those two different uh distributions of income to be able to come up with which one would be more equal or unequal. And for me ultimately it doesn't really matter because I don't think this is an interesting question intellectually, politically or morally. I don't think this is a good thing for

33:55 anybody to be doing just trying to think about how much money they have in compared to other people and uh you know I think it's um it's something that uh you see in children and it's something that well raised children are raised to stop doing at at a certain point sometime when you're seven between seven and 14 I would imagine is the time when you need to be taught to stop comparing yourself to others Stop fixating on the toys that other kids have. Focus on your own toys. Focus on enjoying yourself with your own toys. And if you learn that, then it doesn't matter what toys you have, you will be happy. That's an interesting. And if you don't learn that, it doesn't matter how many toys you have, you will be unhappy. You will always be looking at the other kid who

34:41 has the toy that you don't have. And no matter how much your parents buy you toys, if you keep looking at other toys, there will always be kids with toys that you don't have. And so you'll always be miserable. On the other hand, if you are happy with what you have, if you're able to focus on what you have or making the most of what you have, you could get an empty box and you'll be very happy with all the toys that you can make out of it. That's an interesting way to to put it. Okay. Um, one of the things I'm grateful to you for teaching me is actually the fact that we don't need an inflationary monetary supply that really any amount of money will do as long as it's divisible. Um, can you touch on that just a little bit because I even recently had Judy Shelton on the show and one of the things that was hard for her about Bitcoin is that absolute finite scarcity and she kind of compared

35:27 it to dividing was actually was like issuing more shares of stock and I was like no no no no because you're not diluting anyone you're just dividing right and then some people came back to me and said no Bitcoin's not infinitely divisible and I was assuming on secondary layers it actually is that's what I've read so can you comment a little bit bit about that like why is a finite scarce amount of money good for society and is Bitcoin infinitely divisible? Can it meet all the needs of society no matter how large the economy grows? So the first question really is the most important question in economics I would say and I it was really the moment where it clicked for me. I I would say this was the moment where Bitcoin clicked even though Bitcoin hadn't been invented yet but it was the moment where I became a Bitcoiner even before Bitcoin. It was when I was

36:12 reading a paper by Mario Rothbart called the Austrian theory of money. It's a short paper, something like 20 30 pages or so, but it really might be the best summary of money from Austrian economics perspective, which for me is basically the best treatment of money. Full stop. So it's a great great article and he goes over the main ideas in mises and in the Austrian tradition and he concludes with saying any supply of money is enough because money is acquired for its purchasing power not its quantity not its objective uses. So it's one thing it's unique. Mises calls it a sui generous good. It's a good unlike others. There's no good like money. With every other good you derive some

36:58 benefit, some utility from the good itself in whichever form or shape it takes. Whereas with money, the good itself, its physical manifestation is almost immaterial to its um ability to fulfill its function. What matters is its ability to um is its purchasing power. How much you can exchange it for. So money is something that you acquire for exchange. It's a medium of exchange. You acquire it for only so that you can exchange it. So therefore, what matters is how you exchange it and how much you can exchange it for. And so therefore, you don't need to increase the quantity of money. you can just increase the purchasing power of the existing money for meeting the demand for money for

37:46 more goods for more people. So any quantity of money can be enough because you can always just pump more purchasing power into it. That's ultimately the key idea and that's how it fundamentally works in that um if the demand for any good increases the demand is increasing for the good itself for its ability to perform its function. So if you want water, if you want a car, if you want a table, you know, people want those tables and they need them to do those functions. But as um as the demand for them increases, you need to produce more. So then you need to, you know, generate more. But with money, you don't need to generate more because all you need to do is just have the purchasing power rise. And so as the

38:31 demand increases, then purchasing the market value increases. And so any quantity of demand can be met as the value of the currency appreciates over time. Don't you need to be able to divide it too? It helps when you have 8 billion bodies around the world, right? And Bitcoin's fractionary. So yeah. Well, I mean to be fair, you know, um I guess there is some kind of physical limit at a certain point that shows up when the coin uh when the physical money or or when the form of money is no longer divisible in a way that is convenient for most transactions. So we saw that happen with gold. The reason that silver maintained a monetary role was because in small denominations you couldn't really cut gold into very small fine pieces and go silver had usually a value that was about a 12th to a 15eenth

39:18 of gold's value. So it meant that you needed a 12th of the weight. So you could make easy uh denominations smaller and you could easily see them and understand what they were. But then after um gold took over, you know, part of the reason why gold was centralized was because it uh you know, for smaller denominations, you needed papers or uh uh fiat coins, essentially coins that were made out of cheap metals that were redeemable for uh precious metals. So essentially, part of the reason why we ended up with uh using money substitutes rather than money is because of the inability of gold to scale downward. you couldn't just uh effortlessly break a 1 oz piece of gold

40:03 into 10 ounces or 12 uh pieces of uh a 12th of an ounce and so therefore it's less u less divisible. So yeah, I think there um with Bitcoin this is kind of a uh a uh a potential uh hurdle problem down the road which is a certain point a satoshi becomes too valuable. So currently $1 is a thousand satoshi's when bitcoin when we hit $1 million one satoshi will be one cent. So at that point you know well at this point you know nobody really uses a scent. They're going to put cents out of a commission in the US. Yeah. The penny. Yeah. The penny is going to be out of use. And so by the time Bitcoin hits a 100, sorry,

40:50 by the time Bitcoin hits a million, pennies are going to be less worth less and less. So when Satoshi's hit a penny, there still we we it's not going to be a problem. But when Satoshi's hit a dime, you know, maybe by the time they hit a dime, even that won't be a problem. But maybe when Satoshi hits a dollar, then yeah, that's going to be a problem at that point. So then you know I I I've heard different things from different people. So I don't really know. Uh some people say it's something that can be implemented on chain. It can be revised. Others say it can be implemented on second layer solutions that you can uh that's my friend add basically a decimal point and start adding more zeros. I do not know but you know by the time

41:36 we get to one bit once Satoshi is $1, um I'm going to be ready to confront such a question. All right, my last question for you is what is maybe a dream that Bitcoin has allowed you to have come true? Well, I mean uh I mean the most important dream obviously is my family. um having the ability to take care of my family and provide for them and um to work my uh job as a writer and writing things that I want, teaching things that I like and also provide for my family, doing the things that I love to do and things that I uh think are valued by others. I think it's just uh a blessing that I uh I'm extremely grateful for on every day and uh something that I don't

42:23 take for granted. I think it's it's a true blessing. Well, we're blessed to have your mind in the space. Thank you so much, Safe. I'm glad we got to do this. We're blessed to have you, Natalie. Thank you so much. I'm going to get myself a copy of the Gold Standard. Thank you. [Music]